LEGAL COSTS: LITIGATION IN LABOUR DISPUTES – ‘SOME SOBERING THOUGHTS’

COSTS BENEFITS ANALYSIS

Costs Benefits Buttons Show Value And Analysis

“The first thing we do, let’s kill all the lawyers”Henry the Sixth, Part 2 Act 4, scene 2, 71–78 William Shakespeare.

 

At the outset, the quotation should not be interpreted by the reader literally! It is a lawyer joke“The first thing we do,” said the character in Shakespeare’s Henry VI, is “kill all the lawyers.”

Contrary to popular belief, the proposal was not designed to restore sanity to commercial life.

“Rather, it was intended to eliminate those who might stand in the way of a contemplated revolution — thus underscoring the important role that lawyers can play in society.”

[See Dickstein Shapiro Morin & Oshinsky LLP Firm Profile].

INTRODUCTORY REMARKS:

It has been for a considerable period that the writing of this article has been contemplated.

The precipitating factor that led to the said contemplation has its roots in an article authored and posted by Lorene Schaefer-Hooi, Esq. Workplace Conflict: The Continuum of Dispute Resolution’ LinkedIn September 10, 2014.

In the article by Schaefer supra the author in passing made the following observation, “A discussion I had with a group of business people at various stages of their careers is the genesis for this blog posting.

In the discussion, we were talking about the different dispute resolution processes we might use to resolve a dispute that was happening in their workplace. In the course of the conversation, two things became clear.

First, we were not all using the various dispute resolution terms in the same manner.

Second, we were not all clear on when the various tools might be used to resolve workplace conflict and the pros and cons of each of the processes.

In that discussion, I found myself sketching out on a piece of paper a dispute resolution continuum. My simple sketch got us through that conversation, but when I got back to my office I decided to “pretty it up” a bit and created the [a] chart…” [See depiction of the chart below].

Shortly thereafter, an article of significant edification was published on LinkedIn by Professor Barney Jordaan “When Ignorance Isn’t Bliss: Corporate and Lawyer Resistance to Mediation” Nov 21, 2014.

[Barney Jordaan is a Professor: Negotiation, Mediation, Conflict Resolution].

It took some time to ‘intellectually digest’ the importance of the two articles referred to above, where after the election was made to share the substance of the articles, to wit the collective wisdom contained therein with fellow LinkedIn professionals and other colleagues.

Having done diligent research I came across an interesting observation as to the ancient historical roots of mediation as a means of dispute resolution.

The said observation has been quoted hereunder for the sake of completeness and for ‘those not educated in the divine’ [that includes me]:

“Once upon a time, men arguably wiser and more sensible than those of the present era settled their disputes by sitting down together in a civilised fashion and talking until the problem was solved. No courts, no judges, no longwinded wrangling over technicalities; just a chat by the fireside, overseen by a fine, shrewd fellow with a knack for negotiation.

This was the method favoured by Confucius, and others before him through 4,000 years of Chinese folklore. Buddha championed it in India; while Japanese chukka isha (mutual friends) have long helped businesses resolve their differences.

Not to be outdone, the Roman Empire later picked up the tradition, with intercessors, internuncios, interpolators and interlocutors frequently shuttling to and from antagonistic parties in a diplomatic bid for peace.

Over the generations, however, the realm of dispute resolution gradually became more convoluted and complex. Flexibility and prudence gave way to formality and structure. While a fair, regulated court system is doubtless something to be celebrated, it has – some believe – served more to quash the world of common sense negotiation than to complement it.”

[See article posted by Rebecca Lowe Mediation Back to basics – In-House Perspective”, March 2016, LinkedIn].

In the article by Lowe the following observation has been recorded, “Why businesses have taken so long to incorporate mediation into their strategy – and why so many continue to avoid the option – is something of a mystery, says Michael McIlwrath, Associate General Counsel for Litigation at GE Oil & Gas, a supporter of the pledge’.

[‘Pledge’ signed by the original CPR Corporate Policy Statement for Alternatives to Litigation, which encouraged companies to focus on ADR in the 1980s. The updated version does not replace the original pledge, which has more than 4,000 companies as signatories, but aims to expand it beyond a focus on individual disputes, to a broader systematic approach, whereby mediation is absorbed into everyday best practice].

“Beats me,’ he tells In-House Perspective. ‘Maybe it’s because they don’t understand the advantages of mediation. It’s a no-brainer, and there isn’t any downside.

At a recent conference, some general counsels of large companies in the Nordic countries spoke about mediation as if it was an abstract concept they had never tried.’ [Emphasis added].

After reading the above and eventual realisation of the importance of mediation before litigation this article was conceptualised and drafted, obviously with noble intentions and in the utmost good faith.

PURPOSE OF THE ARTICLE:

At the outset, it should be recorded that postings on the network should preferably be brief and not protracted; nor should it be perceived by the reader as if a comprehensive or an authoritative work of reference on the subject matter.

The objective is to edify, within the confines of the medium and to generate interest and possible debate on the subject matter.

The purpose of the article is to alert litigants as to legal costs that may be incurred in litigious proceedings.

Furthermore, to advise litigants that adjudication may not be an appropriate process to ‘settle scores’ or to vent anger due to unjust treatment by the opposing party and the all time favourite that a resolution of a dispute is impossible because ‘It’s a matter of principle.’

The same considerations, even more so apply to mediation as a means of dispute resolution.

Prospective litigants should engage with the assistance of their legal representatives in what is commonly referred to as a cost benefits analysis prior to litigation in the Courts or tribunals.

COST BENEFIT ANALYSIS:

The question that comes to mind is what is a cost benefit analysis and the rationale for considering the exercise?

Parties may find it of considerable value to conduct a cost-benefit analysis (CBA) prior to conciliation/mediation/arbitration or adjudication.

CBA involves comparing the total expected cost/risk of the non-settlement of a dispute against the benefits of a settlement, in order to establish whether the benefits of a settlement outweigh the costs/risks of non-resolution, and by how much.

It happens ever so often that at the outset of conciliation/mediation proceedings the representative of a party would as an opening remark inform the conciliator/mediator that he/she has “no mandate to settle” – with a follow up comment that the issue in the dispute is, “a matter of principle”.

An experienced colleague [Mediator/Arbitrator] and friend, CCMA Commissioner Paul Botha, when a party raises the ‘matter of principle argument’ from time to time responds, ‘You do not see them, however, these corridors are strewn with the corpses of costly principle issues’, or words to that effect.  

Suffice it to mention that there is no obligation in law to settle a dispute.

However legal battles are notoriously costly and protracted.

In order to provide some indication of legal costs it has been deemed appropriate to refer to an article by the celebrated author HJ Erasmus “Cost and Fee Allocation in Civil Procedure – RSA” (Stellenbosch, Cape Town, 82 to 95 – [Article discussed at CCMA Commissioners Indaba (2013)].

[VII] Examples [See Erasmus 94 to 95] [Please note the article was published in 2009].

The examples are given below of total costs for both sides, at first; the instance is no more that approximations. The cost of any litigation is ultimately determined by the nature of the issues, the bulk of the documentation, the need (or otherwise) of expert testimony, and the amount of work the legal representatives have to do. In a given case, the total of costs and fees may be considerably higher than the examples given. 

  1. Small claim: if within the limit of jurisdiction of the Small Claims Court (R7 500.00 or less): there will be no costs.
  2. Small to medium claim: if within the limit of jurisdiction of the Magistrate’s Court (R1 000 000.00): R25000-R40 000. [The CCMA would fall into this category].
  3. Medium to large claim (say a claim for R750 000.00 in High Court): R250 000.00. [Some cases at the CCMA will fall into this category].
  4. Large claim (say an application for R7 500 000.00 in High Court): R450 000.00
  5. The total cost liability of a plaintiff who loses a claim of R10 million may, depending on the issues, the need for expert testimony, the length of the trial, the bulk of documentation, between R250 000.00 and R700 000.00.
  6. The total cost liability of a defendant who loses a claim of R10 million may be in a similar range to that of a losing plaintiff.”

Therefore, an envisaged fee as a deposit may be requested by legal representatives and determined as reasonable having regard to the technicalities and legal complexities inherent in the cause of action.

An approximate and initial amount of security for costs ‘give or take’, say R 20 000.00 cannot be said to be exorbitant, unreasonable or disproportionate.

A number of obstacles arise when attempting to assess if costs in civil litigation are reasonable or proportionate.

In an article by Paul Taylor, Proportionality and legal costs’ UK Law Society Gazette, 12 March 2014, wherein the author addressed legal reforms in the UK with the purpose to limit legal costs.

The under mentioned quotation is of value:

“The Jackson civil litigation reforms introduced in April 2013 have the concept of proportionality of costs at their core. The idea is that costs should be proportionate to the dispute and this arises in two main contexts:

 

  1. At an early stage, the court is required to determine whether the cost of taking a particular step in the litigation is proportionate (for example how many independent expert reports are required). The implication is that if the cost is disproportionate, a different (less expensive) approach will have to be used.  

 

  1. Secondly, in those cases where the losing party is required to pay the winning party’s costs, the court will limit the costs that the winning party can recover to those costs that were proportionate.” 

However, the meaning of proportionality is not straightforward and the new rules applicable in the UK do not provide clear guidance on how proportionality should be applied.

The suggestion seems to be that a body of law will develop on a case-by-case basis until gradually the meaning will become clear.

Until that happens, litigants, legal advisers and judges will have to guess at what costs will be considered proportionate in particular circumstances.

Taylor then made the observation in the article referred to supra:

“[T]hat the best (and arguably the only) person that can decide whether a particular investment of legal costs is proportionate (that it is a risk worth taking) is the litigant.”

To a large extent and in general the same considerations as to legal costs apply in South Africa and elsewhere.

Of value and instructive is an article by Heidi Grant Halvorson, PhD’, ‘How to Cut Your Losses When It’s Not Working – Learn how to make it easier to cut your losses and move on.’  Psychology Today, Feb 10, 2011,

“You realise that pursuing whatever it is that you’re pursuing – whether it’s being successful in your current career, mending a troubled relationship, or renovating your house from top to bottom – will cost you too much financially or emotionally, or take too long.  But instead of moving on to new opportunities, all too often you simply stay the course and sacrifice your own wellbeing in the process.”

The above serves as an example or rationale to resolve disputes timeously, not only confined to the workplace but in all spheres of life.

The longer a matter continues unresolved the prejudice that the parties stand to suffer increases exponentially.

The article by Schaefer supra is instructive and should be kept in mind by disputants.

A discussion of and reference to the article by Schaefer follows hereunder.

Workplace Conflict: The Continuum of Dispute Resolution:

[By Lorene Schaefer-Hooi, Esq. published in Leadership & Management and LinkedIn September 10, 2014]

Defining the Dispute Resolution Processes:

Schaefer opens by defining dispute resolution processes as set out hereunder:

 Negotiation:

“In negotiation, two or more parties discuss directly their conflict and try to resolve it. There are no third-parties involved.”

Mediation:

“In mediation, the parties in conflict ask a third-party (the mediator) to try to help them resolve their conflict. The mediator is a neutral and does not decide what is “fair” or “right.”

Rather, the mediator’s role is to moderate and guide the process in an attempt to bring the parties together by defining issues and eliminating obstacles to communication.

Although a mediator may point out to the parties potential strengths or weaknesses in their positions in an effort to help facilitate resolution, the decision-making power remains always with the parties to the conflict.”

Arbitration:

“In arbitration, the parties to the conflict have agreed that a third-party (the arbitrator) will hear the evidence presented by each of the parties and make a decision.

The arbitrator’s decision can either be binding on the parties or non-binding depending on the terms of the parties’ arbitration agreement.”

Litigation:

“Litigation is the term used to describe the filing of a lawsuit in court and the process that follows the filing of the lawsuit.

Most commonly in litigation involving workplace disputes, issues of law are decided by a judge and issues of fact are decided by a judge or jury.”

 

WORKPLACE CONFLICT - THE CONTINUUM OF DISPUTE RESOLUTION

Analysis of the dispute resolution continuum:

Parties Retain Control on Left and Cede Control on the Right:

Transgressing from the left to the right the parties increasingly cede control for decision making to a third-party. Many readers may perceive it as of no consequence.

It is inevitable that some disputes cannot be resolved by the parties themselves. Therefore, hand the issue to a third-party and let them decide.

Schaefer then makes the observation, “When I discuss the potential of having a jury decide a dispute with parties in a mediation, I often ask them whether they agree with who gets voted on and off of “American Idol” each week. I know I don’t.”

“Those same voters are members of the jury pool. If you are the person involved in a workplace dispute query, whether you want to make the decision of how to resolve the issue or whether you are comfortable turning it over to the “American Idol” voters?”

The Likelihood of a Win-Lose Answer Increases as You Move to the Right:

A continuation to the right on the continuum, the parties also increase the likelihood that one of them will be a loser and one of them will be a winner. Notice the missed opportunity for a win-win resolution.

Monetary and Non-Monetary Costs Increase as You Move to the Right:

Costs of lawsuits include not only the legal fees that each of the parties will pay their attorneys but also fees associated with court filings, depositions and expert witnesses. For the employee, there is also the reality of foregoing a regular paycheck if he or she is not working.

There are also the non-monetary costs.

Non-Monetary – Employers:

For employers, there is the productivity drain that an on-going workplace dispute causes. Research shows that simple incivility or bad behaviour in the workplace (much less the distraction caused by a pending lawsuit) has a significant cost.

According to research by Professors Christine Pearson and Christine Porath reported in their book THE COST OF BAD BEHAVIOR: How Incivility Is Damaging Your Business and What To Do About It’, among workers who’ve been on the receiving end of incivility:

  • 48% intentionally decreased their work effort;
  • 47% intentionally decreased the time spent at work;
  • 38% intentionally decreased the quality of their work;
  • 80% lost work time worrying about the incident;
  • 63% lost work time avoiding the offender;
  • 66% said that their performance declined;
  • 78% said that their commitment to the organisation declined;
  • 12% said that they left their job because of the uncivil treatment;
  • 25% admitted to taking their frustration out on customers.

  

Non-Monetary – Employees:

For the employee, there is the personal distress. As Atlanta plaintiff’s attorney Steve Mixon explains, “employees cannot start their real healing until the lawsuit is over. While the lawsuit is pending, employees are forced to essentially relive what happened every time they have to answer their attorney’s questions, respond to discovery or give testimony.”

The Workplace Dispute Becomes More Public as You Move to the Right:

One of the biggest benefits to employees and employers who can successfully resolve their dispute through either negotiation or mediation is that they can agree to keep the resolution – and perhaps even the dispute – confidential.

In a workplace dispute, this can be particularly beneficial to both the employee and the employer. Depending on the terms of the arbitration agreement, it is also possible to have an arbitration and the arbitration decision kept confidentially.

By contrast, litigation is public.

It is particularly important for parties to a workplace dispute to understand this point as it is increasingly easy for any interested party to go on-line and read all of the various documents that make up a lawsuit.

As such, investors or potential buyers of a company will often, as a part of their due diligence, read court pleadings to get a feel for the corporate culture.

Similarly, potential employers might read court pleadings as a part of their reference checking.

Insights for Employees and Employers:

Schaeffer’s advice is, control your own conflict!

‘Sit down and talk to each other face-to-face and see if you can negotiate a resolution.’

If you can’t do it on your own, retain an experienced mediator who knows the applicable laws and can work with you to find a win-win resolution.

Articles posted on LinkedIn and in the broader media shows a global trend towards compulsory mediation process prior to litigation.

In an article by Caroline Jan A global trend towards mediation: views from lawyers in 13 countries Dispute Resolution Law Blog, 6th May 2014, the author states that in England and Wales, recent case law highlights that parties in commercial litigation risk adverse costs sanctions if they unreasonably refuse to mediate or if they ignore a request to mediate without providing any justification.

Whilst judges cannot compel parties to mediation, many judges appear to take an active role in case management issues and are keen to encourage parties to agree to mediation.

The same or similar process has been adopted in South Africa where designated magistrate’s courts in Gauteng and the North West have introduced court-based mediation. A litigant will now be able to approach the registrar in writing and request mediation prior to instituting legal action, either by a summons or notice of motion.

The reasons for court-based mediation are many, but its foundation is based on the need to ensure that access to justice is available to all, and to alleviate the burden on our courts which are inundated with civil lawsuits.

It will mean a dispute can now be referred to mediation prior to the institution of legal proceedings or after their commencement but before judgment is handed down.

The registrar has greater powers to convene conferences between parties to a dispute and to explore whether they are amenable to holding mediation.

The office of the registrar will play an important administrative role in ensuring that parties mediate disputes. A litigant can also apply to the court to have a matter mediated and the court has the power to refer the matter to the Registrar to be mediated if there is agreement from the other party.

The court can also mero motu inquire from the parties whether a dispute should not be referred to mediation and if the parties have considered mediating the dispute.

The writer is aware that many lawyers have attended extensive training in civil mediation and received due accreditation as mediators.

Other African countries like Nigeria and Rwanda have had court-based mediation as part of their justice system for some time, and so it will be interesting to see how South Africa fares with its attempt to introduce the process.

[See article by Munya Gwanzura ‘Pilot of court-based mediation under way’, December 9, 2014Munya Gwanzura is a director in the dispute resolution practice at attorneys firm Cliffe Dekker Hofmeyr].

In an insightful article by the celebrated author and a doyen of South African Labour Law, Professor Barney Jordaan, “When Ignorance Isn’t Bliss: Corporate and Lawyer Resistance to Mediation” Nov 21, 2014, the learned author inter alia deals with resistance amongst lawyers to compulsory or even voluntary mediation.

After perusal of the article by Jordaan, supra writer is of the considered opinion that the resistance to engage in mediation by some legal practitioners would to a large extent be diminished.

Jordaan persuasively submits that the primary goal of a civil justice system is the just resolution of disputes through a fair but swift process, at a reasonable cost. Justice has both a process and a substantive dimension.

The outcome must be just, but the process used to achieve a just outcome must also be fair, i.e., creating a level playing field and be designed to operate without unnecessary delay or excessive expense. Otherwise, the justice system could be rendered inaccessible.

Under the heading ‘Problems with litigation,’ the author observes that the rights-based justice system provided by law and the courts is usually depicted as involving a set of known, certain and well-established rules and legal principles.

These are supposedly applied by independent courts to all persons equally, through a process which is fair and in which the substantive outcomes are determined through the objective application of the established norms.

According to Jordaan, this idealised view overlooks a number of factors, such as the impact of the cognitive errors even experienced lawyers (like everyone else) are prone to: see Wistrich, Andrew J. and Rachlinski, Jeffrey J., ‘How Lawyers’ Intuitions ProlongLitigation’

http://scholarship.law.cornell.edu/facpub/602.

These errors distort lawyers’ choices about what advice to provide their clients concerning settlement. As a result, they sometimes may be encouraging their clients to delay settlement when they should not, or advising them to reject settlement offers that they should accept.

Consequently, litigants will invest more resources in litigation than they need to, their excessive investments will drain from the economy resources that could be more productively deployed elsewhere, and courts will be forced to waste their limited resources by making decisions that are unnecessary.

Litigation should be the alternative if a problem-solving process such as mediation fails to provide a mutually agreeable solution to a dispute. Currently, however, most legal practitioners view mediation as the (soft) alternative and litigation as the primary process for resolving differences.

The author submits that mediation certainly is not a panacea for all disputes nor is it always appropriate, e.g., where urgent relief is needed to prevent financial or other imminent harm, a precedent is required or where one party adopts devious tactics.

However, mediation does offer many benefits to disputing parties, including speed of resolution, cost containment (considering the time value of money); confidentiality; risk containment; control over the final outcome; less stress and formality, and limitation of damage to ongoing relationships.

Compare this to litigation, which essentially involves entrusting one’s problem to a system over which we have no control that is renowned for its high costs and delays that are more than likely to destroy whatever business or other relationship we have with the other party to the conflict – all in pursuit of an outcome that is totally uncertain.

Jordaan contends that the above scenario is absurd and makes neither economic nor business sense. It certainly does not assist in managing risk or creating the kind of certainty and control business strives for.

Add to this the fact that all the effort, stress and strain of litigation will in any event probably result in an out-of-court settlement before trial after massive costs had been incurred, and the picture becomes even more absurd.

The benefits of mediation for business are succinctly captured by the author, “Perhaps most important is the adverse effect that disputes and litigation unquestionably have on business relationships – relationships with customers, suppliers, joint venture partners, and others”.

Disputes often result in a significant and ongoing disruption in business relations – or even a complete termination of those relations – resulting in lost business opportunity for both parties. In any successful commercial enterprise, business relationships are critical, and they are as easy to lose as they are costly to develop and maintain.

‘Litigation does not build relationships; it destroys the value associated with them. It can also have a serious negative impact on a company’s reputation’.

CONCLUSION:

The writer deemed it appropriate to quote directly the concluding remarks by Jordaan and references to the words of Mahatma Gandhi hereunder:

“My challenge to the legal profession out there is to acknowledge that clients are entitled to accurate information about mediation, an honest assessment of each dispute for its suitability for mediation and cogent reasons if the advice is that mediation is not appropriate in a given case.”

“My challenge to shareholders and other corporate stakeholders is for them to require accountability for every company decision that involves a choice of litigation over mediation.”

“I had learnt to find out the better side of human nature and to enter men’s hearts. I realised that the true function of the lawyer was to unite parties riven asunder.”

“The lesson was so indelibly burnt into me that a large part of my time during the twenty years of my practice as a lawyer was occupied in bringing about private compromises of hundreds of cases.”

‘I lost nothing thereby – not even money, certainly not my soul’Mahatma Gandhi, after persuading two litigants to settle their differences.

 

Johann Scheepers

April 29, 2017

Copyright:

Copyright reserved by the writer hereof. No part of this article/guide may be reproduced, without prior written permission of the author.

The content of this article is intended to be general in substance and nature; to provide commentary on contemporary issues and where appropriate constitutes a general guide to the subject matter. Specialist advice should be sought about the reader’s specific circumstances.

The commentary or opinions expressed within is that of the writer and not that of any professional organisation or entity with which the writer may be associated with.

 

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THE NEED TO ‘PLEAD’ WHEN ‘GUILT’ IS A GIVEN – ‘WHEN IT IS TIME TO COME CLEAN?’

plea-of-guilty-or-not-guity

 

 

“To err is human; to forgive, divine. Alexander Pope: 1688 – 1744”

 

“This brings me to remorse. It would in my view be difficult for an employer to reemploy an employee who has shown no remorse. Acknowledgement of wrongdoing is the first step towards rehabilitation. In the absence of a recommitment to the employer’s workplace values, an employee cannot hope to re-establish the trust which he himself has broken. Where, as in this case, an employee, over and above having committed an act of dishonesty, falsely denies having done so, an employer would, particularly where a high degree of trust is reposed in an employee, be legitimately entitled to say to itself that the risk of continuing to employ the offender is unacceptably great.” [At 25]

“In the circumstances of this case I consider it to have been irrational for the commissioner to have found that the employees did not commit the dishonesty within the scope of their core functions, that their long service availed them, or that they were entitled to profit from the fact that their dishonesty might readily have been detected by the employer.

 

She misunderstood the concept of a core function and the role of long service in mitigation. She gave no thought to the moral opprobrium attaching to employees who knew that their fraud could, by an analysis of the printouts of a device attached to one of the trucks, readily be detected, and nevertheless committed it.” [At 26]

 

[De Beers Consolidated Mines Ltd v CCMA & others [2000] 9 BLLR 995 (LAC),  Zondo AJP – Labour Appeal Court of South Africa; excerpt from Judgement quoted in the authoritative publication by Professor John Grogan ‘Dismissal’ Juta (2010) 1st ed at 174].


INTRODUCTION

The rationale for the writing of this article stemmed from a number of sources albeit articles, authoritative publications as well as experience as a labour arbitrator presiding in matters where the employee was dismissed for misconduct.

In the first instance, a newspaper article published in LinkedIn by M Tully entitled “Employing people in SA is a minefield for smaller businesses” May 11, 2016, was found to be of interest.

The author, Tully is referred to in the article ‘as the owner of a medium-sized business in SA.’  He opens with the remark “I WOULD like to offer some insight, as the owner of a medium-sized business, into the financial difficulty employing staff in SA.”

The reader is taken through a process that may be referred to or equated with “A Classical Concerto in Three Movements.”

Allegro – The First Movement:  The rigours and soul destroying the process of the pre-employment phase are explained, for example,  “copious amounts of time going through CVs and interviewing candidates sent by recruitment agencies that have seldom actually seen the candidates. You employ this person on the basis that he or she has the skills to fulfil the function and you simply need to train them on your product.”

Then follows the employment of the successful candidate [a ‘sales person’ is used as an example]. The time and costs of in-service training of the employee by a mentor [a minimum of 3 months in service training] are stated as the standard period for training.

Andante – The Second Movement: The employee is “sent out into the field bearing your reputation. You start to see this may not work… After three months in the field with little to no success, you begin performance discussions…Keep in mind the time it’s taking you to go through this process…”

“You counsel the employee…to achieve the goal…inform that after another  three months that with no improvement you will need to begin disciplinary action based on agreed targets.

“After the third warning, you hold a disciplinary hearinga formal event requiring you to pay a presiding officer to hear the matter. One needs to be sure the presiding officer issues the notification to attend the hearing correctly, and that it states all the rights available to the employee.”

“You then hold your mini court case, where you present the evidence you have collected over the past 12 months, and after much deliberation, the employee is dismissed once the verdict is issued.”

Scherzo – The Third Movement: The dismissal is referred to the Commission for Conciliation, Mediation & Arbitration (CCMA) as a dispute, to wit an unfair dismissal.

The author then provides the reader as stated in the article ‘his understanding’ of the statutory dispute resolution processes followed at the CCMA.  After perusal of the author’s understanding of dispute resolution then the reader will conclude that the ‘dice is loaded’ so to speak against the employer insofar as dispute resolution and the costs thereof are concerned.

One is left with the impression that regardless of the ‘guilt’ or blameworthiness of the employee the CCMA Commissioner has little if any discretion but to award “damages” or rather compensation to the maximum amount of 12 months’ salary to the employee.

It is alluded to in the article that notwithstanding meticulous compliance with SA labour laws insofar as substance and procedural fairness are concerned, the CCMA Commissioner will award maximum compensation to the employee.

Finite: Costs will be for the employer’s account and so be it. In conclusion, the author makes the observation that This is truly a disincentive for me to have employed someone.”       

The sentiments expressed in the article, especially the formalistic pre-dismissal processes and the author’s experience with SA labour dispute resolution are not isolated or confined to opinions of an insignificant number of SA employers.

However, the purpose of this article is not to address unnecessary formalism in pre-dismissal procedure per se, as it is entitled “THE NEED TO ‘PLEAD’ WHEN ‘GUILT’ IS A GIVEN – ‘WHEN IT IS TIME TO COME CLEAN?’”

See an article recently published on LinkedIn, “The Deformalisation of Disciplinary Proceedings – Demise of the Criminal Justice Model.”

Also, see “The Deformalisation of Disciplinary Proceedings – Demise of the Criminal Justice Model.” – Scheepers J, ILJ Vol 33, July 2012 Juta, 1539 – 1760, wherein the issue of the formalistic nature of SA pre-dismissal processes was ventilated.

Readers are advised to peruse an article that contains an in-depth analysis of international perspectives on SA unfair dismissal law by BPS van Eck & P Smit “International perspectives on South Africa’s unfair dismissal law” XLIII CILSA 2010:

 “Abstract

The right not to be unfairly dismissed is well-recognised in South African labour law. Anecdotal evidence suggests that South Africa may be overregulated in this regard. ILO Convention C158 provides standard-setting guidelines in respect of the termination of any worker’s employment. In this contribution, ILO standards are considered and the respective positions in the Netherlands, the United Kingdom, the United States of America and South Africa are compared to ILO Convention C158. The authors seek to establish whether unfair dismissal law in South Africa is out of step with international standards and the position in a selection of foreign jurisdictions.”

Suffice it to record that the learned authors inter alia concluded and  submitted that South Africa’s unfair dismissal law (in particular the Code of Good Practice) does not require more in respect of pre-dismissal procedures than the norms established by the ILO and those to be found in the UK.

Van Eck et al furthermore concluded that should South African employers and trade unions agree to more formalistic and court-like procedures in their disciplinary codes (such as the ones prescribed during the era of the Industrial Court) than those required by law, it is something of their own doing. They will have to adhere to such requirements. Such a practice does, however, not have the consequence that South African labour law is more prescriptive than the standards set by the ILO and introduced in countries like the UK. [Emphasis added].

As regards the subject matter of this article is concerned an issue of contention has been the perceived unwillingness by Commissioners of the CCMA and Bargaining Councils to hand down orders as to costs against Applicants in the event of frivolous and vexatious dispute referrals.

The issue has been the subject matter of heated debate and discontent, especially amongst employers.

Section 138 (10) of the South African Labour Relations Act, 66 of 1995 (as amended) (the LRA) provides that “the commissioner may make an order for the payment of costs according to the requirements of law and fairness in accordance with rules made by the CCMA in terms of section 115 (2A) (j) and have regard to (a) any relevant Code of Good Practice issued by NEDLAC in terms of section 203; and (b) any relevant guideline issued by the Commission.

The Commission has now made rules in terms of section 115(2A) (j) of the LRA. Rule 39 confirms that the basis on which an order for costs should be made is “law and fairness”.

In terms of Rule 39 “Order of Costs in Arbitration as stipulated in terms of the recent amended Rules of the Commission and more specifically Rule 39(3) and (4) were considered and quoted in full infra:

“(3)      A commissioner may make an award of costs in respect of the legal fees of a party that is represented in arbitration by a legal practitioner, only if the other parties to the arbitration were represented by a legal practitioner.

(4)        An award of costs for costs in terms of sub-rule (3) must be in the amount of –

(a)  in respect of the first day of an arbitration (including any arbitration concluded in    a single hearing) – R6 000-00 (VAT inclusive);

(b) in respect of each additional day of an arbitration – R4 000-00 (VAT inclusive).”

If a commissioner awards legal fees he or she has no discretion as far as the amount is concerned. Legal fees are awarded at a flat rate in accordance Rule 39(4):

 

  • R6000 for the first day and R4000 for each additional day of the arbitration hearing.

 

  • When legal fees are awarded, no disbursements can be awarded”. [Emphasis added].

Where the requirement is law and fairness the “general rule” is that cost follows the event. This means that the successful party should be awarded his or her costs, but this is not a hard and fast rule – each case must be decided on its own merits.

The courts made it clear that the general rule is tempered by what is called the “basic rule”.

This means that the courts have the discretion to award costs. This discretion must be exercised judicially, which means not arbitrary, unbiased and not acting capriciously.

The overriding factor is to do justice between the parties – fairness to both parties.

Of importance is that Commissioners must address these factors in the award. It must be clear from the award that the commissioner has applied his or her mind and the commissioner must give reasons why costs are awarded.

A commissioner may also make an award of costs in favour of a party who is represented in arbitration by a person contemplated by rule 25(1)(a)* in respect of reasonable disbursements actually incurred in the conduct of its case in the arbitration.

A commissioner who makes an award in terms of this provision must specify clearly the items and amounts in respect of which costs are ordered.

*i) if the party is an employer, a director or employee of that party and, in addition, if it is a close corporation, a member of that close corporation;

  1. ii) any office bearer, official or member of that party’s registered trade union or registered employers’ organisation;

iii) if the party is a registered trade union, any office bearer, official or member of that trade union authorised to represent that party; or

  1. iv) if the party is a registered employers’ organisation, any office-bearer or official of that party or a director or employee of an employer that is a member of that employers’ organisation authorised to represent that party.

Rule 39 c) – d) stipulates the commissioner may make an order for the payment of costs according to the requirements of law and fairness and when doing so should have regard to – :

a)…

b)…

  1. c) any with prejudice offers that were made with a view to settling the dispute;
  2. d) whether a party or the person who represented that party in the arbitration proceedings acted in a frivolous and vexatious manner –
  3. i) by proceeding with or defending the dispute in the arbitration proceedings, or
  4. ii) in its conduct during the arbitration proceedings;
  5. e) – h).

Therefore it is submitted that the amended rules clarify any uncertainty as to the grounds upon which a Commissioner should exercise discretion in making an order as to costs.

Furthermore, the importance of due consideration of the merits of a matter, having regard to  issues such as the prospects of success, the participation in good faith during the conciliation proceedings as well as the conduct during the arbitration of the dispute in the event of non-resolution at conciliation.

 

It is envisaged that in exercising discretion when considering an application for an order as to costs Commissioners will also take consideration of the conduct of the parties as from the commencement of the disciplinary proceedings, for example a timeous and bona fide plea of guilty” by the Applicant/employee at the commencement of the disciplinary proceedings, that is before the decision to dismiss has been taken.

 

PURPOSE OF THE ARTICLE

The motivation to write this brief article emanated from a publication by Kim Lovegrove & Sav Korica “Disciplinary Hearings and Advocacy” Hybrid Publishers.

Kim Lovegrove is a partner of Lovegrove and Lord Lawyers, an advocate in practitioner and professional misconduct matters. He is the Chairman of the Building Practitioners Board in Victoria, in which capacity amongst other things he presides over disciplinary hearings and chairs disciplinary panels.

Sav Korica is a barrister, a co-opted member of the Building Practitioners Board in Victoria, a part-time lecturer at the Victorian University of Technology and, prior to going into the law, was a teacher. He presides over disciplinary hearings with the BPB and one of his principal tasks is the writing of decisions.

About the Book

What happens if your conduct fails to measure up to the standard of professional conduct expected of members of your profession?

What is the difference between professional misconduct and unsatisfactory professional conduct?

The learned authors address the nuances and intricacies of the law that governs untoward practitioner conduct.

Issues addressed in the publication are:

  • the object of disciplinary proceedings
  • the standard of proof
  • differentiating between professional misconduct and unsatisfactory professional conduct
  • handing down disciplinary decisions
  • to plea or not to plea [See video insert]
  • good advocacy
  • natural justice
  • sound decision making.

According to Professor Kim Lovegrove of Australian based attorneys firm Lovegrove, Smith & Cotton – Construction, Planning & Property Lawyers, there are tens of thousands of building practitioners registered in Australia with various practitioner oversight bodies.

Unfortunately, disciplinary jurisdictions are getting bogged down in processing misconduct enquiries; such is the volume of practitioner recalcitrance particularly in the residential sector.

One of the reasons that matters get bogged down and the main reason that hearings take too long to conclude is the habit of many respondents who are often abetted by their advocates in trying to contest the incontestable and endeavouring to resile from the indefensible. This depletes the public purse, makes decision makers cynical and does not bode well with respect to the decision makers sentencing disposition.

So if a respondent practitioner has a prima facie case to answer, then if he or she has a molecule of intelligence then fessing up is the only way to go. Decision makers will afford no sympathy when they find against a respondent if it was abundantly clear that there was no defence because it is a waste of their time and a waste of the Tribunal’s time.

In the quasi-criminal arena of practitioner misconduct, the joke “what is the tenth commandment? Don’t admit it” is no joke. If you don’t admit it and mitigate with skill and sincerity, it can be the difference between very serious censure and a more constrained finding or sanction. Decision makers are heartened if they feel that an applicant “gets it,” can change and won’t do it again.

“Obfuscations” on the other hand understandably incur the wrath of the decision makers as they don’t “get it.” This leads to a decision maker harbouring a fear that they are dealing with a recidivist who has no regard for public dictates, a person who doesn’t give a damn that they have harmed a fellow citizen.

So what are the essential ingredients of a good plea?

If the evidence imputes guilt and the decision is made to enter a plea of guilt, then it is very important to plead and make mention of any mitigating factors. Here is a list of ingredients on point from the publication Disciplinary Hearings and Advocacy that Lovegrove co-authored with highly regarded barrister Sav Korica.

  • Contrition and remorse
  • Cooperation with the prosecutor and the investigatory body
  • Intimate knowledge of the facts and the law on point
  • The availability of apposite fresh references from referees of good repute
  • Knowledge of priors or lack thereof
  • If no real harm has been occasioned, submissions verifying as much
  • Evidence of financials – earnings need to be revealed, outgoings need to be revealed
  • Evidence as to whether there are any dependents  and the impact an adverse finding will have on them
  • Evidence that can be produced that verify the changes that have been introduced systemically to avoid repeat occurrence
  • Evidence of any reparation that has been effected

If the applicant invests time in preparing a plea of mitigation that traverses this mitigation terrain, then it will provide most decision makers with some reassurance that the applicant engaged in one-off conduct, has learnt from the experience and would in all likelihood not become a repeat offender.

As there is High Court authority that an early plea translates into a sentencing discount, the election to plea rather than contest the incontestable is prudent.

 

FAIRNESS OF SANCTION – FACTORS DETERMINING THE FAIRNESS OF SANCTION OF DISMISSAL

In National Union of Metalworkers of South Africa v Vetsak Co-Operative Ltd and others 1996 (4) SA 577 (A); 1996 17 ILJ 455 (A) it was held that the approach must be to find a balance between fairness to both the employee and the employer.

In Sidumo and another v Rustenburg Platinum Mines Ltd & others  (2007)  28 ILJ 2405 (CC); [2007] 12 BLLR 1097 (CC) has to determine whether “a dismissal is fair” or not  Commissioner is not given the power to consider afresh what he or she would do, but simply to decide whether what the decision of the employer. What is required is that he or she must consider all the relevant factors and circumstances.

Factors impacting on fairness:

 Amongst the factors relevant to the determination of fairness are:

 

  • The general vulnerability of employees to unfair decision making;

 

  • The importance of security of employment;

 

  • The importance of the rule that was breached;

 

  • The reasons for establishing the rule including its reasonableness;

 

  • The harm caused by the employee’s conduct;

 

  • The impact that it had on the trust relationship;  

 

  • The effect of setting a precedent;

 

  • The reason why the employer imposed the sanction of dismissal;

 

  • The basis of the employee’s challenge to the dismissal; [pleading of relevance]

 

  • Whether additional training and instruction may result in the employee not repeating the misconduct;

 

  • The employee’s service record;

 

  • The effect of dismissal on the employee;

 

The generally applicable industrial norms of which commissioners will have knowledge through the institutional knowledge of the CCMA.

These norms can be found inter alia in the pronouncements of the Constitutional Court, the Supreme Court of Appeal, the Labour Appeal Court and the Labour Court as well as awards of other Commissioners. In terms of section 138(6) of the LRA. It also appears from the Codes of Good Practice; CCMA Guidelines: CCMA Guidelines: Misconduct Arbitrations.

 

DISCIPLINARY SANCTION – DISHONESTY: IMPORTANCE OF SHOWING REMORSE – CASE LAW

First National Bank, a Division of First Rand Bank Ltd v Language & others
[2011] JOL 28156 (LC);

First National Bank, a Division of First Rand Bank Ltd v Language & others
[2012] 5 BLLR 478 (LC)

[See also: Timothy v Nampak Corrugated Containers (Pty) Ltd  [2010] 8 BLLR 830 (LAC)

 

[18] The arbitrator further ignored evidence that the employee sought approval for his conduct after the fact when he learnt that discipline was being considered against him. Had this been a genuine effort in recognition of real wrongdoing on his part it may very well have served as a mitigating circumstance when considering the appropriate penalty.

However, his act of reversing the charges was done in a devious manner with no indication that he acknowledged his wrongdoing. He persists with his lack of remorse and it is likely that he will repeat this conduct if given the opportunity in the future.

[23] The remedy of reinstatement indicates that the arbitrator clearly failed to apply her mind to the facts before her. Where an employee seeks reinstatement but remains unrepentant for his flagrant transgression of workplace rules and dishonesty, Mr Brassey submitted that the arbitrator was required to have applied her mind to this factor. The employee’s attitude throughout the proceedings was one of contempt for the bank’s rules, and he suggested that latitude should have been extended towards him.

He suggested that the fact that he was disciplined was somewhat reprehensible and persists with his denial that he had committed any misconduct. The principle that the lack of remorse for serious misconduct renders progressive discipline pointless was established in Timothy v Nampak Corrugated Containers (Pty) Ltd 2 when the Labour Appeal Court held that the purpose of progressive discipline was to reintegrate the employee into employment where the employment relationship can be restored to that which pertained prior to the misconduct. In the context of his blatant dishonesty and lack of contrition, which destroyed the trust relationship, reinstatement is hardly an appropriate remedy.

[37] In Sidumo (supra) Navsa J held:

“In approaching the dismissal dispute impartially a commissioner will take into account the totality of circumstances. He or she will necessarily take into account the importance of the rule that has been breached. The commissioner must, of course, consider the reason the employer imposed the sanction of dismissal.

There are other factors that will require consideration. For example, the harm caused by the employee’s conduct, whether additional training and instruction may result in the employee not repeating the misconduct, the effect of dismissal on the employee and his or her long-service record. This is not an exhaustive list.

To sum up. In terms of the LRA, a commissioner has to determine whether a dismissal is fair or not. A commissioner is not given the power to consider afresh what he or she would do, but simply to decide whether what the employer did was fair.

In arriving at a decision a commissioner is not required to defer to the decision of the employer. What is required is that he or she must consider all relevant circumstances.”4

[41]  In relation to the further alternative conclusion reached by the arbitrator, i.e. that the sanction of dismissal was grossly disproportionate, even if he had been found to be guilty of the offence with which he was charged, having reached the conclusions above I am not required to determine this issue save to state that the issue of whether reinstatement is appropriate in the light of mitigating and aggravating factors becomes relevant.

The considerations then of remorse and his lack of contrition (which has been held by the LAC to apply when determining the appropriateness of sanction for misconduct in, inter alia, Toyota South Africa Motors (Pty) Ltd v Radebe & others) 6 would arise in determining whether the arbitrator applied her mind to the totality of facts and circumstances before concluding that reinstatement was appropriate.

If the employee had been found guilty of the misconduct and the arbitrator was required to determine whether the sanction of dismissal was appropriate, his conduct and attitude to the proceedings, to his employer and his colleagues would undoubtedly have become relevant.

In this regard, Mr Brassey made much of the applicant’s vitriolic and intemperate remarks made during the course of the proceedings.

The fact that his outrage was justified in the context of allegations that the outcome of the disciplinary enquiry had been deliberately withheld and that there had been an attempt to falsify documents in order to set him up, as submitted by his counsel, would not entirely justify it. Its impact on the trust relationship would have become material had he been found guilty.

[42] In my view, therefore, in reaching her main conclusion that the employee was not guilty of misconduct, the arbitrator cannot have said to have failed to comply with the duties and responsibilities required of commissioners as set out in Sidumo. Indeed, as Mr Brassey stated, she was undoubtedly conscientious but the question is whether she misdirected herself and therefore abrogated her responsibilities as a commissioner. For the reasons set out above I am of the view that this has not been established in relation to her primary finding of procedural and substantive unfairness.

The court dismissed the review application.

Footnotes

1 My underlining.

2 (2010) 31 ILJ 1844 (LAC) [also reported at [2010] JOL 25711 (LAC), [2010] 8 BLLR 830 (LAC) – Ed].

3 (2006) 27 ILJ 1644 (LC) [also reported at [2006] JOL 17623 (LC), [2006] 9 BLLR 833 (LC) – Ed].

4 Sidumo, supra, at paras [78] – [79].

5 See in this regard County Fair Foods (Pty) Ltd v CCMA [1999] 11 BLLR 1117 (LAC) [also reported at [1999] JOL 5274 (LAC) – Ed].

6 [2000] 3 BLLR 243 (LAC) [also reported at [1999] JOL 5876 (LAC) – Ed] at para [44].

In the matter Southern Sun Hotel Interests (Pty) Ltd v CCMA & others [2009] 11 BLLR 1128 (LC), Van Niekerk, J found in a matter where inconsistency in disciplinary sanction was one of the issues in contention that, in relation to one of the employees used as a “comparator” at the arbitration, the commissioner had failed to note that the comparison had not been put to the company’s representative and that the alleged inconsistency was not raised during the disciplinary hearing, and to assess the credibility of the respective witnesses.

The employee cited as a comparator had consumed company beverages during a schizophrenic attack, and had also expressed remorse. Of the respondent employees, only three had also raised “medical” explanations for their conduct, and these had justifiably been rejected as spurious.

As to the employee who was given a final warning, the Court noted that senior management had expressed shock at the presiding officer’s decision, had “counselled” him, and had immediately issued a general circular to explain to the staff that the sanction was an “aberration”.

The arbitration award was set aside.

From the case law referred to above it is submitted that the importance of showing ‘genuine’ remorse as well as submitting a plea of ‘guilty’ timeously may lead to a decision of a lesser sanction than that of dismissal due to the possibility of a restoration of the trust relationship.

Of importance is that the plea of guilty should be bona fide, the remorse should not be as a result of being ‘caught in the act.’

plea-guiltish

The remorse should be presented as an unreserved acknowledgement of wrong doing with an accompanying undertaking that the misconduct will not be repeated.

The employee is nevertheless at risk as eloquently edified in the quotation from De Beers Consolidated Mines Ltd supra in that the presiding chairperson of the disciplinary enquiry in the exercise discretion as to the appropriate sanction may find that notwithstanding the ‘plea of guilty’ the sanction of dismissal is appropriate having regard to the seriousness of the misconduct.

Of importance is that the sanction of dismissal will only be justified and appropriate if the employer can prove that the trust relationship has irretrievably broken down.

The video insert by Lovegrove is of considerable value insofar as it contains information as to the substance and nature of a ‘compelling plea of guilty.’

Doing a Plea of Mitigation

 

 

CONCLUSION

Legal costs are notoriously high and a punitive order as to costs may have dire financial consequences for the unsuccessful litigant.

Therefore, the persistent denial of wrongdoing notwithstanding knowledge of ‘guilt’ is discouraged.

The better option is to ‘throw oneself’, so to speak ‘at the mercy’ of the presiding officer.

Most presiding officers appreciate it when the employee takes him/her into its confidence and dismissal may not be handed down as a sanction.

 

Johann Scheepers

CCMA Commissioner – Tshwane Region

[Updated: October 30, 2016]

The views and opinions expressed by the writer hereof are not necessarily that of the Commission for Conciliation, Mediation, and Arbitration and constitute that of the writer in his personal capacity

Copyright:

Copyright reserved by the writer hereof. No part of this article/ guide may be reproduced, without prior written permission of the author.

The content of this article is intended to be general in substance and nature; to provide commentary on contemporary issues and where appropriate constitutes a general guide to the subject matter. Specialist advice should be sought about the reader’s specific circumstances.

The commentary expressed herein is that of the writer and not that of any professional organisation or entity with which the writer may be associated with.

 

 

 

‘NEGLIGENCE’ – A GROUND FOR DISCIPLINARY ACTION: HEALTH CARE SECTOR

sb10063567v-001

“The reasonable man is merely a fictitious person, which the law invents in order to have a workable objective form for conduct in society. Accordingly, reasonable man is not an exceptionally gifted, careful or developed person, but neither is he underdeveloped nor someone who recklessly takes chances or who has no prudence. Between the two extremes, the qualities of a reasonable man are found.”

 [J. Neethling, J.N. Potgieter & P.D. Visser, The Law of Delict¸ Butterworths (1989) at 110]

 

INTRODUCTION:

The importance of highly qualified and skilled employees employed within the healthcare sector speaks for itself; especially due to the very environment within which nurses are employed, which requires a substantial standard of skill and degree of care by virtue of the fact that human lives may be at stake in the event of failure to exercise the expected standard of care and skill by an employee.

It could be argued that every patient admitted to a hospital should have the confidence that every effort would be utilised to maximise that patient’s chance of recovery, if not survival.

Therefore, the operational requirements and/or demands by the employer; and the public’s expectation of a “zero tolerance” approach to the incidence of gross negligence is to be expected and respected by every employee employed in the healthcare sector.

The purpose of this article is to attempt to address the problems and difficulties experienced by employers in the healthcare sector in the administration of disciplinary action in the event where an employee stands to be disciplined based on an allegation of negligence.

The writer will make reference to, and analyse a collection of authoritative materials relevant to the stated problem, which comprises of binding judicial decisions and other persuasive authorities such as Labour Court judgments, arbitration awards and authoritative publications on the subject matter.

WHAT IS NEGLIGENCE?

In most arbitration cases which served before the writer and where the Applicant (employee) was dismissed on the ground of negligence, the Respondent (employer’s) disciplinary code or disciplinary rules made reference to the disciplinary offence of negligence or gross negligence.

It is important to record that strictly speaking the inclusion of ‘negligence’ as a disciplinary offence may lead that the trier of a fact may in error interpret negligence as denoting dolus [intention] which comprises the direction of the will [wilfulness] to commit a prohibited act; or an intention by the employee to deviate from the standard of conduct that the diligens paterfamilias or the notional reasonable man [person] would have adopted.

In order to be negligent, it is not necessary for an employee to have intentionally or wilfully deviated from the standard of conduct that the notional reasonable man [person] would have adopted. It is sufficient that deviation took place. The notion of ‘wilful negligence’ is, therefore, a contradiction in terms.

This notwithstanding, in contemporary labour law it is not unusual for disciplinary codes to contain references to the disciplinary offence of negligence or gross negligence.

To determine negligence the courts employ the classic three-part test as formulated in Kruger v Coetzee 1966 (2) SA 428 (AD). Holmes JA said the following at 430 E – H:

“For the purposes of liability culpa arises if –

(a) a diligens paterfamilias in the position of the defendant –

(i) would foresee the reasonable possibility of his conduct injuring another in his person or property and causing him patrimonial loss; and

(ii) would take reasonable steps to guard against such occurrence; and

(b) the defendant failed to take such steps.

This has been constantly stated by this Court for some 50 years.

Requirement (a) (ii) is sometimes overlooked.

Whether a diligens paterfamilias in the position of the person concerned would take any guarding steps at all and, if so, what steps would be reasonable, must always depend on upon the particular circumstances of each case.

No hard and fast basis can be laid down.

Hence, the futility, in general, of seeking guidance from the facts and results of other cases”. 

[Courtesy: Advocate B Geach SC]. [Emphasis added].

Dismissals are often challenged on the ground that dismissal was an inappropriate sanction in that the employer failed to prove “gross negligence”; and therefore, a disciplinary sanction short of dismissal should have been meted out.

The immediate question that comes to mind is what can be termed as ‘negligence ordinary’ or ‘gross negligence’, when will it constitute a disciplinary offence, and when will dismissal be justified on this ground? [See: PAK le Roux “Negligence – The Grounds for Disciplinary Action’ Contemporary Labour Law Vol. 5 No. 1 August 1995 at 1 to 6].

In the article supraLe Roux observes that the concept of negligence is one which has attracted much attention, not only in the field of Labour Law, however, especially in the field of Criminal Law and the Law of Delict.

The authoritative materials and literature in respect of the concept of negligence are often technical. Furthermore, the concept of negligence need not necessarily have the same content in Labour Law as it has in the Law of Delict or Criminal Law.

A recently reported judgment by the Labour Appeal Court attracted much attention and precipitated debate as to the legal question(s) that arose from the facts and questions of law; specifically as regards gross negligence within the healthcare sector.

[See: Afrox Healthcare Ltd v. CCMA & Others [2012] 7 BLLR 649 (LAC); [2012] JOL 208 779 (LAC); see also Dr John Grogan, “Deadly Negligence” Employment Law Journal, August 2012 LexisNexis].

To establish what is meant by negligence, Le Roux supra noted that the under-mentioned general principles are relevant.

According to Le Roux supra in general terms, an employee is negligent if his or her conduct deviates from the conduct that a reasonable man [person] would have adopted in the same circumstances.

The following  elements should have to be considered:

  • Would a reasonable man [personin the particular circumstances of the employee, have foreseen the reasonable possibility that his/her conduct would cause harm to another person or his/her property?
  • Would a reasonable man [person] have taken reasonable steps to prevent such harm occurring?

 

If the answer to the above questions is in the affirmative – and the employee did not foresee such harm and did not take such steps he/she will have been negligent.

In the authoritative publication by Grogan J, Dismissal, Juta 2010 at 200 to 202, the learned author deals with negligence as well as poor work performance.

According to Grogan, negligence is a failure to comply with the standard of care that would be exercised in circumstances by a reasonable person.

In the employment context, there is an obvious overlap between negligence and poor work performance, and perhaps, in some cases, between negligence and incapacity.

Where negligence or poor work performance results from circumstances beyond an employee’s control, such as physical or mental incapacity, it should be treated as such. However, it is also permissible in appropriate circumstances to treat both negligence and poor work performance as forms of misconduct.

  • The question that arises from the commentary and observations by Grogan and Le Roux is what is meant by a “reasonable man/person.”
  • The notional “reasonable person” and the question what would the reasonable person have done under the circumstances based on the notion that the person assumed, has skill, attributes and knowledge of an ordinary person is addressed in the publication by J. Neethling, J.N. Potgieter & P.D. Visser, The Law of Delict¸ Butterworths (1989) at 110:

“The reasonable man is merely a fictitious person, which the law invents in order to have a workable objective form for conduct in society. Accordingly, reasonable man is not an exceptionally gifted, careful or developed person, but neither is he underdeveloped nor someone who recklessly takes chances or who has no prudence. Between the two extremes, the qualities of a reasonable man are found.”

In the healthcare sector and in the event of an allegation of negligence against a nurse, the reasonable person test would not suffice by virtue of the fact that in order to determine whether a highly skilled and specialised worker was negligent, one would not look to the standard of conduct which could be attributed to the reasonable person in the street, but rather to the conduct of a reasonable person with the same degree of skill and knowledge required for that position.

In the much publicised Afrox judgment the Labour Appeal Court scrutinised the merits and found that the employee, a nursing supervisor, had been amiss in his supervisory responsibility over a trainee nurse on duty in the hospital’s ICU ward, and as a consequence of the supervisor’s lack of care which resulted in the death of a patient, the supervisor was correctly dismissed on the ground of gross negligence.

According to Grogan at 201, the test for negligence could therefore not be applied in vacuo or against the standard of reasonable people generally but in the context of the particular workplace or industry.

GROSS NEGLIGENCE DEFINED:

To justify summary dismissal as an appropriate sanction for negligence, the employer carries an onus to prove that the acts or omissions as it manifested constituted gross negligence.

In National Union of Metal Workers of South Africa obo Selepe v. ORAWAB Investments (Pty) Ltd t/a Bergview Engen One-Stop [2013] 5 BALR 481 (MIBC) Van Aarde, C. [at 5.3.5] succinctly defined ‘gross negligence’ versus ‘ordinary negligence’ as follows:

“The carelessness or mere failure which constitutes ordinary negligence, changes in gross negligence to an indifference to, and blatant violation of a workplace duty. 

Gross negligence can be described as a conscious and voluntary disregard of the need to use reasonable care, which has or is likely to cause foreseeable grave injury or harm to persons, property or both. It is conduct that is extreme when compared to ordinary negligence.

  • Gross negligence also focuses on the magnitude of the risks involved, such that, if more than ordinary care is not taken, a serious mishap is likely to occur. … [At 5.3.6]
  • Ordinary negligence and gross negligence accordingly differ in degree of consciousness or inattention; and both differ from ‘wilful misconduct’, which is conduct that is reasonably calculated to cause damage or injury.”

BRIEF ANALYSIS – AFROX JUDGMENT:

Grogan J in “Deadly Negligence” supra summarised and commented on Afrox as analysed hereunder.

A patient was admitted to a certain hospital’s intensive care unit after surgery. Doctors thought the patient would recuperate, but he died the next morning.

It transpired that the patient had developed complications at night which had not been reported to the ICU day staff when they took over. The nurse/supervisor in charge of the night staff and an assistant were charged with negligence and dismissed.

The Labour Appeal Court held that even without the testimony of the junior nurse, there was abundant evidence to prove that the senior nurse had failed lamentably to perform the duties expected of him. He was an experienced nurse held in high esteem by his peers.

On the night in question, the senior had chosen one of the least experienced nurses in the unit to supervise the patient and had known early in the evening that his subordinate had made incorrect entries on the patient’s chart.

He failed dismally in his duty of due diligence and care expected from a person in his position in that he had not drawn the duty doctor’s attention to the errors committed by the junior nurse.

The Court in effect held that the senior nurse failed to properly supervise his subordinate, and failed to act responsibly when realising that the patient’s condition was deteriorating.

A further aggravating factor was that the senior nurse had simply handed over to the day staff without mentioning that the patient was in difficulties. The Court found his insistence that the patient had remained in a stable condition incomprehensible.

Of importance was that the LAC accepted that dismissal is “momentous” for most employees.

But in the Afrox case, the employee had vast experience and worked in an environment in which most decisions were matters of life or death.

Given the nature of the employer’s business and the public expectation that the business would be conducted properly, the senior nurse’s dismissal was eminently fair.

  • Upon analysis of Grogan J in the article referred to supra “Deadly Negligence”, the act or omission and the lack of care and skill manifested itself in the form of the conscious and voluntary disregard of a need to use reasonable care, which was likely to cause foreseeable grave injury or harm to the patient as well as to his employer, in that an employer could be held to be vicariously liable by virtue of the demise of the patient.

Our courts have shown to be less tolerant of employees who possess or claim to possess special skills and who, because of their position and experience – qualification – can be expected to be aware of the performance standard set by the employer.

Where the degree of professional skill is required, is on a very high level, and potential consequences of the smallest departure from that high standard are so serious, then one failure to perform by those standards is enough to justify dismissal. [See: Somyo v. Ross Poultry Breeders (Pty) Ltd, [1997] 7 BLLR 862 (LAC)].

CONCLUSION:

In conclusion, dismissed employees often use as a defence in cases of dismissal on the ground of negligence lack of; or non-existence of professional in-service training and continued education by the employer either as a complete defence; or as mitigating circumstances.

In such event, it would be incumbent on the employer to submit evidence in rebuttal, failing where to the presiding Commissioner may find in favour of the employee and order either retrospective reinstatement or a substantial amount of compensatory relief to the employee.

J Scheepers.

[Updated – 2016/09/27]

Copyright:

Copyright reserved by the writer hereof. No part of this article/guide may be reproduced, without prior written permission of the author.

The content of this article is intended to be general in substance and nature; to provide commentary on contemporary issues and where appropriate constitutes a general guide to the subject matter. Specialist advice should be sought about the reader’s specific circumstances.

The commentary expressed herein is that of the writer and not that of any professional organisation or entity with which the writer may be associated with.

 

 

 

 

 

Alive To God – Daily Thought

Alive to God


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Psalm 105:4

‘Look to the LORD and His strength; seek His face always.’

  • No matter where you find yourself, seek after His presence.
  • Let the wonder of His presence flood your soul.
  • Knowing He is with us is like having rain in a dry and barren place.
  • May you know His strength and experience His presence daily.

Prayer: Lord, I look You and I look to You alone for all that I need and long for. Fill me with You strength and surround me with Your presence. Amen.

www.alivetogod.com

AFRIKAANS

Psalm 105:4

‘Vra na die HERE en sy sterkte; soek sy angesig altyddeur.’

  • Maak nie saak waar jy is nie, soek na Sy teenwoordigheid.
  • Laat die wonder van Sy teenwoordigheid jou siel oorvloed.
  • Om te weet dat Hy met ons is, is dieselfde as om reën in ‘n dorre en onvrugbare plek te hê.
  • Mag jy Sy krag ken…

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BUSINESS SOLD ‘AS A GOING CONCERN’ – LEGAL OBLIGATIONS OF ‘THE OLD’ AND ‘THE NEW EMPLOYER’

SOLD AS GOING CONCERN

“The phrase “going concern” is not defined in the LRA. It must, therefore, be given its ordinary meaning unless the context indicates otherwise. What is transferred must be a business in operation ‘so that the business remains the same but in different hands’. Whether that has occurred is a matter of fact which must be determined objectively in the light of the circumstances of each transaction.

In deciding whether a business has been transferred as a going concern, regard must be had to the substance and not the form of the transaction. A number of factors will be relevant to the question whether a transfer of a business as a going concern has occurred such as the transfer or otherwise of assets both tangible and intangible, whether or not workers are taken over by the new employer, whether customers are transferred and whether or not the same business is being carried on by the new employer.

What must be stressed is that this list of factors is not exhaustive and none of them is decisive individually. They must all be considered in the overall assessment and therefore should not be considered in isolation.”

[NEHAWU v the University of Cape Town and Others (2003) 24 ILJ 95 (CC)]

1. INTRODUCTION:

I have recently been requested by a Labor Consultant to submit a brief memorandum pertaining to the statutory rights and obligations as stipulated in Section 197 of the Labour Relations Act, Act 66 of 1995 (as amended) (the LRA).

In short: Sections 197, 197A & 197B of the LRA are applicable in the event of business closures, mergers, transfers, and sales of businesses.

The facts, as well as the questions of law that may arise, have been provided by Consultant.

For the purpose of the memorandum and according to the brief by the Consultant an entity Co X (hereinafter referred to as “the new employer”), purchased Co Y (hereinafter referred to as “the old employer”).

The question that arises is whether Section 197 of the LRA is applicable?

“197. Transfer of contract of employment:

 (1) In this section and in section 197A –

 (a) “business” includes the whole or a part of any business, trade, undertaking or service; and

 (b) “transfer” means the transfer of a business by one employer (“the old employer”) to another employer (“the new employer”) as a going concern.

 (2) If a transfer of a business takes place, unless otherwise agreed in terms of subsection (6) –

 (a) the new employer is automatically substituted in the place of the old employer in respect of all contracts of employment in existence immediately before the date of transfer;

 (b) all the rights and obligations between the old employer and an employee at the time of the transfer continue in force as if they had been rights and obligations between the new employer and the employee;

 (c) anything done before the transfer by or in relation to the old employer, including the dismissal of an employee or the commission of an unfair labour practice or act of unfair discrimination, is considered to have been done by or in relation to the new employer; and

 (d) the transfer does not interrupt an employee’s continuity of employment, and an employee’s contract of employment continues with the new employer as if with the old employer.”

 If answered in the affirmative, the legal obligations that arise, if any as a result of the purchase by Co X of Co Y, or rather between the new employer [Co X] and the old employer [Co Y] .

Also of relevance is the security of tenure of the employees of the old employer vis-à-vis the statutory obligations of the new employer. 

In other words, considerations as to joint and several liability in terms of the provisions of Section 197 of the LRA.

2. SECTION 197 TRANSFERS

Applicability of section 197? 

Section 197 is triggered if all three of the following conditions are met: 

A transfer from one employer to another,

The transferred entity must be the whole or part of a business (here, the test is whether there is an economic entity capable of being transferred), and

The business must be transferred as a going concern (here, the test is whether the economic entity that is transferred retained its identity after the transfer.

[See Douglas & others v Gauteng MEC for Health [2008] 5 BLLR 401 (LC)].

When is a business transferred as a going concern?

“The phrase ‘going concern’ is not defined in the LRA. It must, therefore, be given its ordinary meaning unless the context indicates otherwise. What is transferred must be a business in operation ‘so that the business remains the same but in different hands’. Whether that has occurred is a matter of fact which must be determined objectively in the light of the circumstances of each transaction.

In deciding whether a business has been transferred as a going concern, regard must be had to the substance and not the form of the transaction. A number of factors will be relevant to the question whether a transfer of a business as a going concern has occurred such as the transfer or otherwise of assets both tangible and intangible, whether or not workers are taken over by the new employer, whether customers are transferred and whether or not the same business is being carried on by the new employer.

What must be stressed is that this list of factors is not exhaustive and none of them is decisive individually. They must all be considered in the overall assessment and therefore should not be considered in isolation.”

[NEHAWU v University of Cape Town & others (2003) 24 ILJ 95 (CC)].

[See, also, SAMWU & others v Rand Airport Management Company (Pty) Ltd & others (2005) 26 ILJ 67 (LAC)].

Transfer – relevant factors?

Factors to be taken into account in deciding whether a transfer envisaged by Section 197 has occurred are amongst others:

 What happened to the goodwill of the business?

 What happened to the stock-in-trade?

 Did the business premises change?

 Were the contracts with clients or customers taken over by the new employer?

 Is the business continuing to service the same customers?

 Was the workforce or part of it taken over?

 What happened to the assets of the business including assets leased by the   business?

 Did the new employer take over responsibility for the debts of the old employer?

 Has the operation of the business been interrupted and, if so, the duration thereof?

 Did the same or similar activities continue after the transfer?

See Ponties Panel Beaters Partnership v NUMSA & others [2009] 2 BLLR 99 (LAC) –

An example of a case that can dramatically be referred to or termed as, “A sad and expensive exercise in avoiding ‘the long arm of the law’”.

[Special acknowledgement to LexisNexis South Africa – “Current Labour Law – 20th Annual Seminar on Labour Law – Restructuring and retrenchment” at 84 – 88 Presented by Professors Halton Cheadle, PAK le Roux, and Clive Thompson].

The Ponties case concerned a rather convoluted set of transactions between related corporate entities. The litigation issue was whether the same underlying business had been transferred as a going concern, so attracting the obligations of section 197 of the LRA.

In brief, a number of employees who had been engaged by what the Court described as “Ponties 1”, a panel beating concern (and close corporation), were dismissed because of the apparent operational requirements of the business. The fairness of these dismissals was challenged in the Labour Court.

However, while proceedings were still pending, Ponties 1 ceased trading and another close corporation, “Ponties 2”, commenced operations as a panel beater from the same premises, using the same personnel and the same telephone and fax numbers that had been used by  Ponties 1. Ponties 2 employed several of the workers who had been dismissed by Ponties 1.

Ponties 2 then changed its name to Triponza Trading. A common set of personalities figured behind all of these chameleon-like trading entities.

The Labour Court matter between the now joined respondents Ponties 1 and Ponties 2 was heard by Zilwa AJ during May 2002 and on 3 June 2003, he handed down his judgment.

He found the dismissal of the employees to be automatically unfair and ordered Ponties 1 and Ponties 2, jointly and severally, to pay a total amount of R706 113,84 plus costs.

The judgment debt was not settled. Instead, Triponza informed its staff that it was going into liquidation and that in consequence, everyone was to be dismissed. On 13 June 2003, Landman J granted an interim order interdicting Triponza from dismissing its employees, and the interim order was confirmed by Gamble AJ on 6 August 2003.

On 15 July 2003, another trading entity, the appellant in this matter, purchased from a yet another entity, Pontie Esterhuizen (Pty) Ltd, the assets which Pontie 1 and Pontie 2 (aka Triponza) had previously leased from Pontie Esterhuizen to run the panel beating concern.

Around June 2003, one Pierre Johan Potgieter – who was conducting the business of the appellant as a sole proprietor informed the employees of Triponza that he was taking over the business of Triponza.

Potgieter, however, aware of the debts overhanging Ponties and Triponza, denied that he had actually bought the business of Ponties 1, Ponties 2 or Triponza. He stated that he only purchased the assets of a panel beating business. Ten of the 23 employees were then engaged by the appellant, and the remainder retrenched.

Potgieter claimed an agreement with a trade union NUMSA to the effect that his new business would not be responsible for “any claim whosoever [sic] arising out of the employment relationship between Triponza or its predecessors”.

Against this tortuous background, the Labour Court and on appeal, the Labour Appeal Court, had to decide whether the earlier panel beating business had been transferred to Ponties Panel Beaters Partnership as a going concern, meaning that the latter was burdened with the earlier judgment debt of over R700 000.

The Labour Court having found for the union and the individual workers, the Labour Appeal Court in its turn considered that the following facts were common cause:

a) The appellant conducts a panel beating business which is the same business that was conducted by Triponza, Ponties 1 and Ponties 2.

(b) The appellant’s business is operated from the same premises that Triponza, Ponties 1 and Ponties 2 conducted their business.

(c) The appellant employs a substantial number of the employees who were previously employed by Triponza, Ponties 1 and Ponties 2.

(d) The appellant paid severance packages to employees of Triponza that it did not employ and, in doing so, took into account their period of service with Triponza.

(e) The employees employed by the appellant were paid at the same rate of pay and using the same clock numbers and machinery as were used during Triponza time.

(f) The former manager of Triponza, one Mr Van Rooyen, was retained by the appellant and continued as manager of the business.

(g) The appellant is using the same telefax and telephone numbers that were used by Triponza.

(h) The appellant is operating under a trading name which has some striking similarity with that of Ponties 1 and Ponties 2.

(i) Naturally, the appellant’s clientele is the same as that which used to be Triponza’s clientele.

The Labour Appeal Court was not swayed by the fact that there may have been an interruption in business activities from the time Triponza was closed down to the start-up date of the appellant:

“Even if it could be said that there was an interruption in the business, same could not have been for such a long period that it could be said that it broke the connection between the business of Triponza and that of the appellant . . . The fact that the business was closed should not in itself be a factor that would prevent the applicability of section 197 of the Act.”

Furthermore:

There is also the fact that assets which the appellant bought which it needed for the business were bought not from Triponza but “Pontie Esterhuizen (Pty) Ltd”.

“In my view, this does not change the picture at all. The fact of the matter is that Triponza had leased the same assets to conduct the business. The appellant did not lease them but bought them. Indeed, as stated in paragraph 9 above, the agreement between the appellant and Pontie Esterhuizen (Pty) Ltd reflects a provision to the effect that the appellant was purchasing all the assets necessary for the conduct of the business.

In that agreement, it was stated that the assets in question were still on the premises from which Triponza had conducted the business and from which the appellant sought to conduct its business too.”

“In my view, the fact that the assets which the appellant bought in order to run the business were not bought from Ponties 2 but from a third party is no basis, on the facts this case, to conclude that Triponza’s business was not transferred to the appellant as a going concern.” (At 110–111)

The Court concluded that there had indeed been a transfer of a business as a going concern and that the alleged deal between the appellant and the union (in terms of which the latter allegedly accepted that the appellant would not be responsible for any claim arising out of the employment relationship between Triponza or its predecessors) was not a binding agreement.

The appeal was dismissed.

The lessons arising from the  Ponties case are fourfold:

  • The labour courts can be very single-minded in pursuing a business as it morphs its way over time through multiple guises, ever alert to assessing whether the underlying business entity is still essentially travelling on intact.
  • An interruption in business operations does not necessarily break the nexus between successor entities for section 197 purposes.
  • A change in the ownership attributes of the assets that make up the business is not decisive in breaking the succession obligations.
  • Section 197 obligations are difficult to avoid, and the courts intend to keep things that way.

In Transport and Allied Workers Union of SA v Transnet and others (J175/2011)ZALCJHB (Delivered on 20 June 2013) it was confirmed that for a transfer to be established there must be components of the original business which are passed on to the third party. These may be in the form of assets or the taking over of workers who are assigned to provide the service.

3. Automatically unfair dismissals related to Section 197

3.1  In Douglas & others v Gauteng MEC for Health [2008] 5 BLLR 401 (LC) the court held a section 197 transfer had occurred and as such the employees were automatically transferred by operation of law to the Gauteng Department of Health.

It held further that unless there was an agreement reached between the old employer, the new employer, and the affected employees to vary terms and conditions of employment, that the transferred employees were to transfer on terms and conditions that were on the whole not less favourable to those they previously enjoyed.

If an employee is offered a contract which is substantially less favourable and he/she is dismissed thereafter it would constitute an automatically unfair dismissal which would entitle the employee to maximum compensation (24 months).

[See City Power (Pty) Ltd v Grinpal Energy Management Services (Pty) Ltd and Others [2015] ZACC 9, where the Constitutional Court held that Section 197 provides that where there is a transfer of a business as a going concern, there is an automatic transfer of employees to the new employer.

Once a transfer of the kind identified by section 197(1) ‘as a going concern’ occurs, it automatically carries with it all contracts of employment that existed immediately before the transfer took place.

The employment contracts are automatically transferred together with the business. This happens by operation of law. The person to whom the business is transferred replaces the employer in terms of the contracts of employment and assumes all obligations of the previous employer].

 

HALLO I AM THE BOSS

4. Liability of the old and the new employer

4.1  In Anglo Office Supplies (Pty) Ltd v Lotz (2008) 29 ILJ 953 (LAC) it was held that the new employer will be liable even if the old employer dismissed employees, where the dismissal occurs in relation to section 197(2)(c) of the LRA.

[See also Business & Design Software (Pty) Ltd & another v Van der Velde [2009] 8 BLLR 8 746 (LAC)].

Consultation and section 197 transfer

5.1  In Irvin & Johnson Ltd v CCMA & others [2002] 12 BLLR 194 (LC), the employer dismissed employees pursuant to a transfer of business. The Court held that this did not relieve the employer from his duty to consult and where employees have accepted unreasonable offers of alternative employment they would not be deprived of severance pay.

In Jenkin v Khumbula Media Connexions (Pty) Ltd [2010] 12 BLLR 1295 (LC) the employee was sent home after a section 197 transfer took place. The employer thereafter took a decision to stop all his benefits.

The Court held that consultation entails more than just a mechanical approach and therefore found that the applicant’s dismissal after only 1 meeting was procedurally unfair.

6.1  In Forecourt Express (Pty) Ltd v SATAWU & others [2007] 2 BLLR 101 (LAC) the court held it was not for it to find that the employer should run its business in a different manner after a takeover had taken place. Even if the employer holds strong views, the union is within its rights to make proposals and it would not automatically mean that retrenchment was a fait accompli.

7. The effects of section 197 transfer

At the heart of s 197 is s 197(2). It provides that if a transfer of a business as a going concern takes place:

  • the new employer is automatically substituted in the place of the old employer in respect of all contracts of employment in existence immediately before the date of transfer;
  • all the rights and obligations between the old employer and an employee at the time of the transfer continues in force as if they had been rights and obligations between the new employer and the employee;
  • anything done before the transfer by or in relation to the old employer, including the dismissal of an employee or the commission of an unfair labour practice or act of unfair discrimination, is considered to have been done by or in relation to the new employer;
  • the transfer does not interrupt an employee’s continuity of employment and an employee’s contract of employment continues with the new employer as if it were the old employer.
  • The new employer in effect replaces the old employer. Provided that there is, objectively speaking, a going concern transfer, the transfer of employment takes place automatically irrespective of whether or not the two employers characterising the transfer as a going concern transfer;
  • Employees are transferred without their consent. If the employee does not want to be employed by the new employer the employee can resign.

[See  PAK Le Roux “Outsourcing and s197 of the LRA – Going concerns, employment contracts and the transfer of a business or service” Contemporary Employment Law, (2015) Volume 24 No. 7 at 68 – 69].

The above principles are qualified in three ways.

Firstly, the above-mentioned consequences of a transfer can be amended by agreement.

This agreement must be between the old employer, the new employer or both of them acting jointly on the one hand and any appropriate body or person referred to in s189 of the LRA. This is either a trade union representing employees or the employees themselves. This agreement can take various forms.

For example, it can be agreed that the employee will not be transferred or that the employee will be transferred on terms and conditions of employment less favourable to those that the employee enjoyed under the old employer.

Secondly, the new employer will be deemed to have complied with the above requirement if the employees are transferred on terms and conditions of employment that are on the whole not less favourable to the employees than those on which they were employed by the old employer.

However, this does not apply if employees’ conditions of employment are determined by a collective agreement.

Thirdly, special arrangements are made with regard to pension, provident and retirement funds.

The new employer may vary the terms and conditions of employment of transferred employees if the new terms and conditions are ‘on the whole not less favourable to the employees than those on which they were employed by the old employer’.

 Section 197(4) provides that the transferred employees may be transferred to a pension, provident, retirement or similar fund other than to which the employee belonged prior to the transfer.

[See IMATU v Cape Joint Retirement Fund (2008) 29 ILJ 1687 (C)].

However, if the new employer’s conditions of employment are regulated by collective agreement, the terms and conditions prescribed by the agreement prevail.

[See J Grogan ‘Dismissal’ Juta, 2014 2nd ed. at 510; also see, Experion SA (Pty) Ltd v Haynes & another (2013) 34 ILJ 529 (GSJ)]. 

8. CONCLUSION

Also of importance is s197(5) which provides that the new employer is bound by a collective agreement or arbitration award that bound the old employer in respect of the transferred employees.

Section 197 also makes provision for the joint and several liability of the old and new employer in certain circumstances.

Finally, it is necessary to make the point that where a going concern transfer takes place in the context of insolvency, s197A regulates the terms on which a transfer takes place.

 

Johann Scheepers.

August 12, 2016

Copyright:

Copyright reserved by the writer hereof. No part of this article/ guide may be reproduced, without prior written permission of the author.

The content of this article is intended to be general in substance and nature; to provide commentary on contemporary issues and where appropriate constitutes a general guide to the subject matter. Specialist advice should be sought about the reader’s specific circumstances.

The commentary expressed herein is that of the writer and not that of any professional organisation or entity with which the writer may be associated with.

 

 

 

Your own worst critic

andrewroebert

Be kind to yourselfOften we can be so hard on ourselves. We blame ourselves for things that happened. We blame ourselves for success lost or opportunities missed. We often harp on our mistakes or things we should have done when God sees things so differently. God sees all things you have been through and perhaps failed in and He wants to take all those things and work them together for good!

Romans 8:28 All things work together for good to those who love God, to those who are the called according to His purpose.

You may say: ‘I could have, I should have, I would have,’ but God says I will take your could haves’, should haves’ and would haves’ and I will still give them value by using them for something good! With God we can know what it means to not have regrets. We all have regrets, but God can even…

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Spin, myths and The Market

As a well-known sceptic and prophet of doom and gloom, I must concede that some of the recent developments within the South African political ‘arena’ have been somewhat humorous. However after reading the article by Terry Bell a ‘reality check’ followed. If you are on holiday, then it is suggested that the article should be perused on or after 2 January 2016. Enjoy the holiday! Regards, JS. 🙂

Terry Bell Writes

Outrageous political satire seems to be a South African speciality. Only it is mostly produced by politicians rather than penned by satirists. Comedians such as Pieter-Dirk Uys long ago realised this fact, as did cartoonists such as Zapiro.

But, over the past week, we have had a bumper dose of ridiculous official level behaviour followed by spin that, without any irony or intent, revealed the sheer inanity of the financial and economic system. It also illustrated quite how illusory is our democracy.

All of this will doubtless provide a wealth of material for comics, but will be no laughing matter for most of the population since the effects of last week’s mini economic meltdown will be felt for months. It will come mainly in the form of rising prices, and the major sufferers will be the poorest of the poor and the majority of workers whether in formal or informal…

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5 Tips for Avoiding Legal Malpractice Claims

When your client turns against you…this article is of substantial value.

CEBblog™

The following is a guest-blog post from attorney and CEB authorMichael Denison:

Virtually every lawyer who is sued for legal malpractice or malicious prosecution has committed some kind of error. However, in defending such suits, it is often clear that the error is not an act or omission of legal malpractice, or conduct that would support malicious prosecution; rather, it is typically the failure to document the file with memos, telephone logs, transmittal forms, and/or reports to the client.

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